The "short-term weather outlook with warmer than normal readings forecast into next week and no imminent storm threats in the Gulf of Mexico could keep pressure on the market for weeks to come," said Tim Evans, a senior analyst at IFR Markets.

Demand seen slipping

"Demand for heating is expected to be about 30% below normal for this week because of warmer temperatures," according to Fitzpatrick.

Under these conditions, "the midsummer lows in both crude and heating oil certainly seem reachable," he said, noting that supply concerns have waned of late.

On Monday, December crude oil fell $1.46, or 2.4%, to close at $59.76 a barrel in New York -- under the $60 mark for the first time since July 21. Prices finished $6.47 below the benchmark contract's close at $66.23 a month ago.

November heating oil closed down 7.37 cents at $1.7698 a gallon, its lowest level since early August, while November unleaded gasoline dropped 9.81 cents to end at $1.5261 a gallon. Both contracts closed above $2 at the end of last month.

December became the lead-month contract for crude products at the session's end. December heating oil finished at $1.8239, down 7.3 cents, and December unleaded gas fell 7.55 cents to close at $1.5901.

Earlier Monday, the Commerce Department reported the biggest jump in personal income since December 2004, potentially signaling that "demand could start to expand again, especially against a backdrop of lower energy prices," said Fitzpatrick. See Economic Report.

In addition, "concerns about shortages, while hardly pressing when the temperatures outside are pressing 70 degrees, could resurface," he warned. There is still "considerable refining capacity" offline in the wake of recent hurricanes.

Nearly 68% of production in the Gulf of Mexico remained shuttered as of Monday, almost unchanged from Friday, according to the U.S. Minerals Management Service.

"Demand destruction is certainly responsible for taking pressure off supply," said Fitzpatrick. "The hurricane premium is slowly being bled from prices as the season draws to an end."

Government stockpiles data released Wednesday, showed a buildup in crude and gasoline inventories as output in the Gulf continues to recover, but the report also confirmed that distillate supplies have been falling since mid-September. See full story.

Adding pressure to oil prices Monday, the Organization of Petroleum Exporting Countries said it has "more than adequate" spare production capacity to meet expected worldwide winter demand, according to a news report from the Associated Press.

In other energy-related news Monday, the average price for a gallon of regular unleaded gasoline fell under $2.50 a gallon Monday to its lowest level since mid-August, according to the Oil Price Information Service and AAA's Daily Fuel Gauge Report. See the report.

The price averaged $2.492 Monday, down 18.5% from the record high of $3.057 from Sept. 5, but still up 46 cents from the year-ago level, the data showed.

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